Exelon Corp. on Wednesday reported $490 million in generally accepted accounting principles (GAAP) net income for the third quarter of 2016, a 22 percent decrease from the $629 million reported in 2015. GAAP diluted earnings per share dropped from $0.69 to $0.53.
On a non-GAAP basis, net income rose from $757 million to $841 million, and diluted EPS spiked from $0.83 to $0.91.
Exelon, a Chicago-based utility, operates 16 nuclear power plants across the country, making it the United States’ largest nuclear generator. Despite the weak quarter, Exelon raised its full-year earnings guidance to $2.75 per share from $2.55.
The earnings report touches on Exelon’s effort to purchase Entergy’s James A. FitzPatrick Nuclear Plant in New York. The utilities reached a $110 million sale agreement in August, after the New York Public Service Commission (NYPSC) approved Gov. Andrew Cuomo’s Clean Energy Standard. The program, which is expected to stave off closures at FitzPatrick and Exelon’s R.E. Ginna Nuclear Power Plant and Nine Mile Point Nuclear Station, would pay upstate nuclear operators about $8 billion in subsidies over its full life cycle. If the deal goes through, Exelon stands to collect on all those subsidies as the owner of all upstate New York nuclear plants.
Exelon’s earnings report says as part of the agreement, Exelon will reimburse Entergy for about $200 million to $250 million of incremental costs to refuel the plant and operate and maintain the facility after the refueling outage, if and when the deal goes through. The refueling will not be needed if Entergy closes FitzPatrick, as planned before the sale was announced. The deal is expected to close in the second quarter of 2017, pending state and federal regulatory approvals. Utilities and environmental groups have filed various challenges with the federal regulators.
Exelon President and CEO Chris Crane during Wednesday’s earnings call discussed the situation in New York, as well as the potential for similar energy legislation in Illinois, where the company owns the Quad Cities Generating Station and the Clinton Power Station.
“(A key priority) is finding an economically sustainable path for our financially challenged nuclear plants,” Crane said. “We’re currently on very different paths, but we expect clarity this quarter in New York and also Illinois. … We continue to believe the CES design is sound and that it will withstand any legal challenge.”
Exelon in May said it would close the Quad Cities and Clinton plants if Illinois legislators failed to pass the Next Generation Energy Plan, which they did. Legislators will next consider an energy package during November’s veto session. Absent any action on the legislation, Crane said both facilities will close. Exelon previously scheduled shutdown dates for Clinton in June 2017 and Quad Cities in June 2018. Some have called the energy plan an unnecessary bailout for a profitable company, while others claim the utility is crying wolf with the threatened shutdowns.
“We remain hopeful that we can reach a constructive solution that’s truly in the best interest for our state and our fellow Illinois citizens,” Crane said.
Exelon’s nuclear fleet, including its owned output from the Salem Nuclear Generating Station in New Jersey and 100 percent of the Constellation Energy Nuclear Group’s units, generated 44,709 gigawatt-hours for the quarter, compared with 45,180 gigawatt-hours for the same period in 2015.
Excluding Salem, Exelon-operated nuclear plants achieved a 96.3 percent capacity factor for the quarter, compared to 95.5 percent for 2015. Planned refueling outage days for this quarter totaled 17, compared with 27 in 2015. There were zero non-refueling outage days this quarter, compared to 11 days in the same period of 2015.
